New research shows that video can play a vital part in car sales. We look at how OEMs, dealerships, and other B2C retailers can integrate video at different points in the customer journey.

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The auto industry faces a challenge: in a recent global study, only 1% of respondents across all regions and customer groups reported that they were fully satisfied with their overall car-buying experience. Meanwhile, more and more elements of the customer journey are fully migrating online. While the pandemic has accelerated this trend, studies from the past two years show us that consumers had already turned towards online channels for prospective car buying in increasing numbers:

  • The same McKinsey survey cited above reports that 70% of prospective customers view the presence of a physical car as the main reason for their visit to a dealership. The only instances where shoppers prefer an in-person to online interaction is the actual test drive, and evaluating for look and feel.
  • Video can stand-in for an in-person experience: Google research shows that 64% of shoppers say that video formats such as a 360 degree view of the car would encourage them to buy a vehicle without even taking a test ride.
  • More than 55% of consumers globally would like to pay digitally. There is demand for this in the United States, even where this option is limited: in a survey by Bain, 40% of respondents in the US said they would purchase online, given the option.  

The pandemic has brought particular logistical and economic challenges to auto retailers and OEMs alike: new-car purchase intent in the United States remains 20% below pre-pandemic levels while purchase intent in Europe and Asia remains around 10% lower than it was before the pandemic. While the outlook for used cars is slightly rosier — August and September of 2020 saw the fastest turnover of used car inventory in the US in the past six years, driven in part by a two-month pause in auto manufacturing — we’ve seen a corresponding slow down in the used car market as coronavirus restrictions have eased and new car dealerships have opened up.

While the transition to online shopping channels was already well under way, this trend has been heightened by the pandemic. As Jürgen Stackmann, Volkswagen’s brand sales chief, told the Financial Times in August, “The Covid time has created a much stronger link and emphasis on direct and online sales capabilities.” In this changing environment, particularly at a time when social distancing precautions remain underway, video chat is an underutilized resource in converting leads, generating sales, and managing after-sales customer service for OEMs and auto retailers. Other video products, such as webinars and live streaming, can be used in tandem.

As OEMs and auto retailers build online capabilities, brand and sales strategists should keep in mind the different ways video products can be integrated in the customer journey. Whether you are a dealership figuring out how to integrate video chat with the rest of your sales pipelines, or you represent an OEM building  live streaming events, Daily provides enterprise-level service to OEMs and auto retailers. Below, we lay out key considerations when designing video strategy for different stages of the customer journey:

Video is an effective medium for branding and lead generation campaigns

Whether it’s traditional video or live streaming, video converts auto customers: Google research shows that over 60% of auto shoppers reported visiting a dealership or dealer website after watching a video of a vehicle they were considering. Video provides an unparalleled dynamism, and live video especially recreates the look and feel of an event. There's a reason retailers like BMW are increasingly turning to live streaming to launch and promote vehicles.

Real-time video chat can push customers further down the sales funnel

Online tools, especially real-time video chat, represent an alternative way for dealerships, and companies that sell directly to consumers, to reach potential buyers. Previously, car buyers used to visit dealerships up to eight times before they purchased a vehicle. Now, on average, they visit only twice, a trend accelerated by Covid 19: in Germany, the number of daily visitors to Mercedes’ sales websites increased by 70% between April and June 2020. Daily’s API allows companies to integrate video chat into custom chat widgets, as well as third-party platforms like Intercom (via our Intercom integration) — a great option for customer engagement and driving sales.  

Customers increasingly favor online buying options where available

Google estimates that 30% of car sales will take place online by 2028 while, similarly, Daimler estimates that 25% of passenger car sales will be made online by 2025. The Mercedes-Benz manufacturer already employs a direct sales model in South Africa and Sweden, which it is rolling out to other markets next year. In tandem, it is reportedly investing a “triple-digit million-euro amount” in online capabilities. While franchise laws prohibit direct sales in the USA, 72% of Ford dealerships have started offering online sales options.

Increasingly complex features create a need for robust after-sales services. Image credit: Daimler.

Video chat can boost after-sales care, profitability, and customer LTV

Vehicles boast increasingly complex features. Customer demands and business models are changing. These factors underpin the need for new after-sales service solutions. From a dealership perspective especially, connecting with customers after a sale via video chat can help diagnose whether customers need to bring their car in for repairs or whether customers have overlooked a feature. The best after-sales solutions maximize customer loyalty — but they also accelerate profitability and reduce vehicle down-time.

Video can help connect the disparate parts of the auto retail landscape to better meet customer needs

Video chat can help OEMs connect directly with dealerships, or connect prospective customers with dealerships. The latest Gartner report on the auto industry stresses that competitive advantage that can be gained from emulating Tesla’s customer-centric processes — Tesla prioritizes customer relationships which in terms of the LTV of a customer is wise: people will need a new car later down the line as well.

While the auto industry dealership model is fragmented, especially in the U.S., prospective customers need people who can guide them through the sales process. Ultimately, customers shop for cars, not dealerships, and it makes sense that they turn to car manufacturers in the research process.

Interested in learning more about video solutions for auto sales?

Real-time video chat is a way of creating a human connection as well as problem solving. Daily helps OEMs and auto retailers build video chat solutions for their needs and with the Daily API you can start building on video in minutes. Whatever your place in the auto retailer landscape, our team is glad to help.